French bank Credit Agricole SA (EPA:ACA) said on Wednesday it had inked an agreement to sell the share capital of Greek unit Emporiki Bank of Greece SA to local sector player Alpha Bank AE (ATH:ALPHA) for EUR1.00 (USD1.31).

The deal, which has already been greenlighted by the vendor’s and buyer’s boards and by the Greek bank support fund, the Hellenic Financial Stability Fund (HFSF), is expected to close by year-end.

The move is in line with Credit Agricole’s plan to beef up its financial structure and zero in on core operations, the French bank said.

Before finalisation of the transaction, Credit Agricole will step up its recapitalisation of the target to EUR2.85bn, having already funnelled EUR2.3bn in July, the French lender said. Besides, it will subscribe to EUR150m of forthcoming convertible bonds of Alpha Bank, which will be redeemable in stock of the buyer, it added.

As a result of the recapitalisation and subscription for Alpha Bank’s debt instruments, Credit Agricole’s funding to the entities to be shed, which stood at EUR2.1bn as at end-September 2012, will contract by some EUR700m, the French bank said. The vendor is also mulling over a purchase of assets from Emporiki and Alpha Bank, which would result in reduction in the residual funding to Emporiki.

The deal will have a negative impact of an estimated EUR2bn on Credit Agricole’s net income for the third quarter of 2012, the French lender said.

The vendor’s corporate and investment banking arm, Credit Agricole CIB, is serving as its advisor on the divestment, along with Japan’s Nomura Holdings Inc (TYO:8604). Clifford Chance LLP and Koutalidis Law Firm have been appointed legal counsels.